Correlation Between Generation Alpha and FREYR Battery

Can any of the company-specific risk be diversified away by investing in both Generation Alpha and FREYR Battery at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Generation Alpha and FREYR Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Generation Alpha and FREYR Battery SA, you can compare the effects of market volatilities on Generation Alpha and FREYR Battery and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Generation Alpha with a short position of FREYR Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generation Alpha and FREYR Battery.

Diversification Opportunities for Generation Alpha and FREYR Battery

0.0

Correlation Coefficient

Generation Alpha  FREYR Battery

Pay attention - limited upside

The 3 months correlation between Generation and FREYR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Generation Alpha and FREYR Battery SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FREYR Battery SA and Generation Alpha is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Generation Alpha are associated (or correlated) with FREYR Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FREYR Battery SA has no effect on the direction of Generation Alpha i.e., Generation Alpha and FREYR Battery go up and down completely randomly.

Pair Corralation between Generation Alpha and FREYR Battery

Given the investment horizon of 90 days Generation Alpha is expected to generate 2.77 times more return on investment than FREYR Battery. However, Generation Alpha is 2.77 times more volatile than FREYR Battery SA. It trades about 0.09 of its potential returns per unit of risk. FREYR Battery SA is currently generating about 0.12 per unit of risk. If you would invest  0.01  in Generation Alpha on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Generation Alpha or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Generation Alpha  vs.  FREYR Battery SA

Generation Alpha

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Generation Alpha are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Generation Alpha disclosed solid returns over the last few months and may actually be approaching a breakup point.

FREYR Battery SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FREYR Battery SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, FREYR Battery showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Generation Alpha and FREYR Battery

The main advantage of trading using opposite Generation Alpha and FREYR Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generation Alpha position performs unexpectedly, FREYR Battery can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in FREYR Battery will offset losses from the drop in FREYR Battery's long position.

The idea behind Generation Alpha and FREYR Battery SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.